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All in a Day's Work® - Insights on Labor & Employment Law

NLRB changes its deferral standard to little fanfare

On December 15, 2014, the National Labor Relations Board (NLRB) issued a decision in Babcock v. Wilcox Construction Co., 361 N.L.R.B. No. 132 (click on “Board Decision”), in which the NLRB changed the standard that it will apply to defer unfair labor practice charges to the grievance procedures contained in a collective bargaining agreement. As any employer who has dealt with an unfair labor practice charge knows, deferral had been an effective tool that allowed employers to force the union or employee to use the grievance procedures contained in their collective bargaining agreement.

Under the new standard announced in Babcock, the NLRB will only deem deferral appropriate if all of the following apply:

The collective bargaining agreement explicitly authorizes the arbitrator to decide a statutory issue (e.g., an unfair labor practice). The party seeking deferral can satisfy this burden by proving that the specific statutory right at issue was incorporated in the collective bargaining agreement or that the parties explicitly authorized the arbitrator to decide the right in that specific case.

The arbitrator was presented with and considered the statutory issue or was prevented from doing so by the party opposing deferral. The Babcock decision does not provide much guidance on this point, but the party seeking deferral must show that:

the arbitrator identified the statutory issue; and

explained why he found that the facts presented either do or do not support the unfair labor practice allegation; and

NLRB law must reasonably permit the award. The party seeking deferral must establish that the arbitrator’s decision constitutes a reasonable application of the legal principles that would govern the NLRB’s decision on the facts of the case. In other words, the arbitrator’s decision must be one that reasonably applies the National Labor Relations Act.

In practical terms, this change means that employers will likely face duplicative litigation on related issues (a grievance and an unfair labor practice charge). According to Member Philip Miscimarra, the NLRB’s new take on deferral guarantees that arbitration will be anything but final and binding.

The only positive result for employers from the Babcock decision is that the NLRB expressly ruled that these changes would apply prospectively. Thus, “where current contracts do not authorize arbitrators to decide unfair labor practice issues, we will not apply the new standards until those contracts have expired[] . . . .” This means that where a current agreement does not authorize arbitrators to determine unfair labor practice issues, the deferral standard summarized in Collyer, United Technologies, and the General Counsel’s January 20, 2012 memorandum will continue to govern those cases.